The following provisions appear in IRR-A and maintained in the draft IRR:

"Section 43. Procurement of Domestic and Foreign Goods

Consistent with the Government’s obligations under international treaties or agreements, goods may be obtained from domestic or foreign sources: Provided, however, That the procurement thereof shall be open only to eligible suppliers, manufacturers and distributors: Provided, further, That, in the interest of availability, efficiency and timely delivery of goods, the procuring entity may give preference to the purchase of domestically-produced and manufactured goods, supplies and materials that meet the specified or desired quality, in accordance with provisions of Commonwealth Act No. 138."

The underlined phrase seemed a bit confusing. It would appear that domestic preference under the Flag Law (C.A. 138) is applicable only to domestically-produced goods, supplies and materials which are subsequently manufactured also domestically. However, according to Supreme Court in its decision in AIMI vs MWSS (G.R. No. L-45515), domestic preference is applicable to any of the following:

1) to unmanufactured articles, materials or supplies of the growth and production in the Philippines;2) to manufactured articles, materials and supplies produced, made and manufactured in the Philippines substantially from articles, materials or supplies of the growth, production or manufacture in the Philippines; and3) to domestic entities vs foreign entities.

I suggest the provision include the above situations as well and the use of "may" be replaced with "shall" to make it mandatory to procuring entities to apply the Flag Law.

If the wording is "may", the procuring entity can disregard C.A. 138 despite the provision of the law on Domestic Preference. If should be made mandatory because that is how C.A. 138 is worded.http://www.gppb.gov.ph/laws_rules/laws/CA_138.pdf

Careful friends. Note that this provision is EXACTLY THE WORDINGS OF THE RA 9184. IRRs are supposed to provide guidelines and procedures on how to IMPLEMENT THE LAW -- NOT AMEND IT...

Last time I checked, my copy of RA 9184 states:

ARTICLE XII, RA 9184Domestic and Foreign ProcurementSECTION 43. Procurement of Domestic and Foreign Goods. — Consistent with the country's obligations under international treaties or agreements, Goods may be obtained from domestic or foreign sources and the procurement thereof shall be open to all eligible suppliers, manufacturers and distributors. However, in the interest of availability, efficiency and timely delivery of Goods, the Procuring Entity may give preference to the purchase of domestically-produced and manufactured goods, supplies and materials that meet the specified or desired quality.

Defcon, thank you for pointing out that the same sections in the law and the IRR are almost identical (not exactly the same). However, the last sentence of the IRR contains the phrase "in accordance with Commonwealth Act No. 138. For the IRR to be "in accordance" with the Flag Law, then the provision of the law should be applied, which, provides that the application of Domestic Preference shall be mandatory, as follows:

"SECTION 4. Whenever several bidders shall participate in the bidding for supplyingarticles, materials, and equipment for any dependencies mentioned in section one of this Actfor public use, public buildings, or public works, the award shall be made to the domesticentity making the lowest bid, provided it is not more that fifteen per centum in excess of thelowest bid made by a bidder other than a domestic entity, as the term “domestic entity” isdefined in section two of this Act."